WASHINGTON--CMS' new fee schedule for power mobility devices slashes reimbursement by more than 40 percent for some equipment, prompting stakeholders to warn that it will be difficult, if not impossible, for providers to remain profitable in the rehab business.

The updated fee schedule, released Monday, takes effect Nov. 15.

"The new pricing is going to be devastating," said Rita Hostak, vice president of government relations for Longmont, Colo.-based Sunrise Medical and president of the National Coalition for Assistive and Rehab Technology. "For a lot of suppliers it's going to mean they're not going to be able to provide product anymore."

Hostak said many of the providers she talked to after the fee schedule was issued indicated they were trying to decide whether to allow their rehab techs to continue performing evaluations.

Gerry Dickerson, director of rehab technology for Queens, N.Y.-based MedStar Surgical, a full-line HME with a rehab staff of eight, said he wasn't sure what to do after he heard the news. "I sent two Medicare recipients home and said, 'Until we figure out what we're doing, there's no sense even proceeding because we can't provide you with equipment.'"

As an example of the drastic fee reductions, Hostak said reimbursement levels for both the Group III no-power option and single-power option wheelchairs have dropped by 32 and 34 percent, respectively. "Those are substantial hits to an industry that didn't already have significant margins to begin with," she said.

Particularly with regard to complex rehab products, providers' service component is expensive when it comes to time and labor, Hostak said. In addition to clinicians' evaluations, providers also must make extensive home assessments involving time and labor.

With those considerations, the new fee schedule deals "a potentially fatal blow to at least the rehab industry," Hostak said, while the impact of the reductions "certainly will be felt significantly by everybody who provides power mobility."

Having fewer providers in the market would limit beneficiaries' access to the equipment they need, according to Hostak and other power mobility stakeholders, who responded to the fee schedule with an immediate outcry:

• Elyria, Ohio-based Invacare Corp. said that reductions of up to 41 percent for high-end products used by severely disabled consumers--those with diagnoses like amyotrophic lateral sclerosis, muscular dystrophy, cerebral palsy, spinal cord injury and severe brain injury--will prevent those consumers from having access to the appropriate power wheelchair unless they have the means to purchase it themselves.

  For consumer/geriatric mobility, the proposed fee schedule calls for reductions from 21 to 44 percent, which also will prevent many seniors from receiving the right PMD, Invacare said.

  "CMS must retract the October 2 PMD reimbursement levels and work with consumers, physicians, providers and manufacturers to establish fair prices that ensure consumer access to the medically appropriate power mobility device," stated Invacare Chairman and CEO Mal Mixon.

• According to Seth Johnson, vice president, government affairs, for Pride Mobility, Exeter, Pa., and chairman of the American Association for Homecare's Rehab and Assistive Technology Council, "We think the levels of these reductions are unsustainable and are going to force Medicare beneficiaries into inappropriate products. [This] will cause unnecessary harm to all stakeholders--Medicare providers, beneficiaries and certainly manufacturers."

  The RATC plans to ask Congress and CMS to stop any implementation of the fee schedule until fair prices are established. "We have six weeks before the Nov. 15 implementation deadline to impress upon CMS and Congress the need to make significant changes to the published fee schedule amounts," Johnson said.

  AAHomecare called on rehab providers to contact their members of Congress about the fee schedule and ask them to intercede with CMS.

• The VGM Group, Waterloo, Iowa, said in a statement on its Web site that several legislators have indicated they would assist the industry in correcting inadequacies within the fee schedule via legislative or regulatory action.

  "Now that the fee schedule has been released, we (VGM, U.S. Rehab, NCART, [AAHomecare's] RATC and several prominent vendors) will be working closely with these key legislators and others to voice strong concerns with the level of these cuts in reimbursement for PMDs," VGM said. "It is clear that many of these new fee schedule amounts are totally unreasonable and must be corrected."

• The Restore Access to Mobility Partnership, a coalition of manufacturers and suppliers, noted in a statement that a supplier who has been receiving a $6,500 reimbursement from Medicare for a wheelchair needed by people with the most severe physical disabilities would only receive $3,800 after the new pricing is effective.

  The group said over the last three years "CMS has responded to the increased demand for mobility equipment with a series of policy, rule and pricing changes that appear to be aimed at restricting beneficiary access to mobility equipment, crippling the industry that supplies it and restraining costs."

  RAMP also said CMS "has taken a very shortsighted view because Medicare beneficiaries with power mobility equipment save the Medicare system millions of dollars because they require less home care, hospitalization and emergency treatment from falls and fall-related injuries."

In an explanation accompanying the fee schedule, CMS said that "from 1995 to 2003, expenditures for power wheelchairs increased by an astonishing 2,705 percent, from $43 million to $1.2 billion in just over eight years. In response, CMS has developed a comprehensive strategy to address timely and appropriate coding, payment and coverage of PMDs."

The agency said pricing in the new fee schedule was based on manufacturers' suggested retail prices, and that in August the prices had been shared with the industry, which was allowed to provide comments. "We shared this information with the industry and took their comments into account in setting the fee schedule prices," said a CMS spokesperson. "Prices were set using the standard gap-filling process, which is familiar to the industry."

However, according to Invacare and other equipment-makers, gap-fill pricing methodology "has been universally recognized as flawed by CMS' own admission, and it does not take patient needs into account."

Johnson said the pricing information that CMS put out for comment was "simply pricing source information" and not gap-filled pricing, adding that the industry had supplied numerous comments recommending that the agency use an alternative method of establishing fees. "These reductions are clearly excessive," he said, "and unjustifiable from my perspective."

Meanwhile, MedStar Surgical's Dickerson, a 30-year veteran of the rehab industry and an NCART board member, cancelled a clinic Tuesday to "try to figure out [what to do] because I just can't get my head around this.

"I can't understand how what seem to be reasonable people are doing this to the beneficiaries," he said.

To view CMS' fee schedule amounts for PMDs, click here.